Homer Manufacturing produces different models of 22-calibre rifles. The manufacturing costs assigned to its economy model rifle

Question:

Homer Manufacturing produces different models of 22-calibre rifles. The manufacturing costs assigned to its economy model rifle before and after installing JIT are given in the following table. Cell workers do all maintenance and are also responsible for moving materials, cell janitorial work, and inspecting products. Janitorial work outside the cells is still handled by the janitorial department.

In both the pre- and post-JIT setting, 10,000 units of the economy model are manufactured.

In the JIT setting, manufacturing cells are used to produce each product.

The management of Homer Manufacturing reported a significant decrease in manufacturing costs for all of its rifles after JIT was installed. It also reported less inventoryrelated costs and a significant decrease in lead times. Accounting costs also decreased because Homer switched from a job-order costing system to a process-costing system.

image text in transcribed

image text in transcribed

Required:
1. Compute the unit cost of the product before and after JIT.
2. Explain why the JIT unit cost is more accurate. Also explain what JIT features may have produced a decrease in production costs. Use as many specific cost items as possible to illustrate your explanation.
3. Explain why Homer Manufacturing switched from a job-order costing system to a process-costing system after JIT was implemented.
4. Classify the costs in the JIT environment according to how they are assigned to the cell: direct tracing, driver tracing, or allocation. Which cost assignment method is most common? What does this imply regarding product costing accuracy?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Cost Management Accounting And Control

ISBN: 9780324233100

5th Edition

Authors: Don R. Hansen, Maryanne M. Mowen

Question Posted: